Neotel, Vodacom spectrum transfer: Neotel hopeful

Vodacom announced on Monday, 19 May 2014 that it would acquire 100% of Neotel, including shareholder loans against it.

Among the benefits of the acquisition, Vodacom said, is that the combination of the two networks will improve overall network availability and reduce the cost to serve customers.

In particular, Neotel brings its fibre network infrastructure and valuable frequency spectrum to the table.

With Neotel’s spectrum, Vodacom said it will be able to accelerate the roll-out of its Long Term Evolution (LTE) network.

However, the deal must still receive the nod from regulators. This includes an application to transfer Neotel’s spectrum licenses to Vodacom that must first be approved by the Independent Communications Authority of South Africa (Icasa).

Asked about the spectrum transfer, Neotel boss Sunil Joshi said that he believes there are “enough structures in place” for the “right decision for South Africa” to be made.

Neotel has access to 2x12MHz of 1,800MHz spectrum, 2x5MHz of 800MHz spectrum, and 2x28MHz of 3.5GHz spectrum.

Joshi said that they have deployed networks in each of the frequency bands they have been assigned. This may make for a compelling argument when Neotel and Vodacom make their case before Icasa to keep the spectrum.

The suggestion is that should Icasa decide not to transfer the spectrum licenses then it would essentially be responsible for the potential negative impact to Neotel’s existing users.

According to Joshi, they serve the telephony needs of their retail and small enterprise customers on 800MHz, while the 1,800MHz band is where Neotel has rolled out first stages of its LTE network.

Its 3.5GHz spectrum Neotel uses to offer its near-line-of-sight WiMAX products aimed at areas where there is no wireline infrastructure.

Asked whether Neotel would migrate its CDMA customers in the 800MHz band to the GSM-based technologies used by mobile operators like Vodacom, Joshi said that it’s a hurdle they would cross when the acquisition completes.

Neotel will continue to reassess its offerings to ensure the most cost-effective and high quality service for its customers, Joshi said.